12. Much wider in its scope than any proposal
put forward under the old Deregulation and Contracting Out Act
(unlike the Special Occasions Licensing Order, the only RRO to
have been made so far, which was very similar in its effects to
the 1999 Millennium Licensing order), this can perhaps be regarded
as the first true regulatory reform proposal. In most respects,
it gives rise to no doubts at all about its appropriateness for
delegated legislation, and indeed embodies precisely the sort
of welcome change envisaged under the Regulatory Reform Act. However,
we were concerned to examine further one aspect of the proposal
which, due to its potentially controversial nature, might have
given rise to doubt as to whether it ought to be included in the
Order in its current form: namely, that which would raise, from
85% to 90%, the rate of grant support which the Secretary of State
can provide to VA governing bodies towards their liabilities.

CHANGE IN THE RATE OF GRANT SUPPORT TO VA GOVERNING
BODIES

13. VA schools, the overwhelming majority of
which are what have become known as "faith schools",
have specific rights in relation to the constitution of the governing
body, the arrangements for pupil admissions, and the employment
of staff. The requirement that they should make a contribution
towards the cost of premises-related work is the quid pro quo
for those rights. This requirement has been set down in primary
legislation since the 1944 Education Act, when it was set at 50%;[10]
it has been subject to change since then, most recently in 1975,[11]
but always by means of primary legislation.

14. Three reasons were adduced by the Department
in support of their claim that this change was necessary:[12]

to compensate for the additional liabilities
which are being placed on VA governing bodies;

to compensate for increases in VAT since the
last change in the rate of support was made;

to enable governing bodies to take advantage
of the increased grant available from the Department (grant which
is being made available regardless of this proposal).

15. The first of these reasons appears to us entirely
consistent with the purpose of the Order. The total cost of those
liabilities which will be the responsibility of governing bodies
following implementation of these proposals is considerably greater
than the cost of those for which they are currently liable (see
"Financial Impact" below). Nor does it appear to us
that it would be inappropriate to take the opportunity of amending
the rate of support to take into account the increases in the
rate of VAT since the rate of support was first set at 85%.[13]
The final reason, however, raised the question of whether the
proposal would result in VA schools gaining financial advantage
whilst nevertheless retaining their rights unchanged.

16. The Department argued, in the explanatory memorandum,
that no additional funding was being made available. The change
would simply enable VA schools to access funding which is already
available, but which they could not afford to take advantage of
if they had to match it with 15% from their own funds, rather
than just 10%. It argued that the change was necessary if the
requirement for VA schools to make a contribution was not to prevent
the achievement of Government policy to improve the condition
of schools.[14] However,
it did not appear to us to address the argument that, even if
additional support would be provided from funds already allocated
to the sector, VA schools should still, as a matter of principle,
have to pay a contribution equivalent (in terms of the percentage
of the total cost of premises-related work) to that which they
paid previously if they were to access the funds available.

17. We therefore asked the Department:

what proportion of the 5% increase would be accounted
for by the need to compensate VA governing bodies for VAT increases
and changes in the allocation of liabilities; and what proportion
by the desire to make increases in available capital funding affordable
to VA schools;

what responses relevant to the increase in support
to faith schools had been received to the further consultation
on the White Paper; and what implications, if any, those responses
had for this aspect of the proposal; and

how the Government responded to the argument
set out in the preceding paragraph.[15]

We also invited the Education and Skills Committee
to comment on this aspect of the proposal.[16]

18. The Department's reply to the second and third
of these questions was not entirely satisfactory, being based
apparently on a misunderstanding of what exactly we were asking.
However, in view of its response to the first, we did not find
it necessary to pursue either point. The Department told us (and
demonstrated with the appropriate figures[17])
that, of the five percentage point rise in the rate of grant support,
some 4½ percentage points would be accounted for by the increased
costs falling on VA governing bodies as a result of the changes
in liabilities.[18] It
added that it was not possible to split the remainder between
the other two elements, but the balance being so small, it was
likely to be absorbed entirely by increased VAT.

19. We are therefore content that the change in
the rate of grant support confers no significant financial benefit
on VA governing bodies over and above that which is necessary
to compensate for the changes in liability, and that no issues
relating to the appropriateness of this proposal for delegated
legislation therefore arise. We note that the Education and
Skills Committee, having seen the Department's response, has reached
the same conclusion.[19]

THE DEPARTMENT'S LEGISLATIVE PROGRAMME

20. Whilst not impinging directly on the appropriateness,
or otherwise, of this proposal for delegated legislation, we were
nevertheless interested to examine further its relationship with
the Department's wider legislative programme. Shortly after this
proposal was laid before Parliament, the Government introduced
an Education Bill, which Ministers described as a 'deregulatory
measure'.[20] The Bill
contains, among other things, provision to give governing bodies
the power to provide after-school childcare, one of the list of
51 examples of potential regulatory reform orders which the Government
published during passage of the Regulatory Reform Act.[21]
We asked the Department for some clarification of how this proposal
fitted with the remainder of its legislative programme, and to
explain why no proposals contained in the Bill had been brought
forward as regulatory reform proposals.[22]

21. The Department's reply is printed with the Appendices
to this Report.[23] We
accept that, in the circumstances, it was appropriate for the
Department to pursue other legislative change through the Education
Bill, whilst proceeding with this regulatory reform proposal under
the Regulatory Reform Act procedures in order to give the best
chance of implementation by the beginning of financial year 2002-03.
Nevertheless, we were pleased to note the Department's acknowledgement
of the benefits of pursuing the Regulatory Reform Order route
to legislative change. "[This] route has helped in building
awareness of our proposals and achieving a strong consensus for
change amongst all key stakeholders," it says, and quotes
a response from the Chief Building Surveyor at Portsmouth City
Council which commented favourably on the explanatory document
laid with this proposal.[24]
We hope other Departments, and other interested parties, will
find the Regulatory Reform Order route similarly attractive, and
we welcome the stated commitment of the Department for Education
and Skills to using the procedures available under the Regulatory
Reform Act.[25]